Research

UK councils invest £9bn of pension funds in fracking companies – new research

180829 Ros Wills

Cuadrilla’s shale gas site at Preston New Road near Blackpool where fracking is expected this month. Photo: Ros Wills, 29 August 2018

Data released today suggests that UK councils have invested more than £9 billion from staff pension funds in fracking companies, despite opposition to the process.

The news comes as the first high volume hydraulic fracture in the UK since 2011 could be days away.

Many councils have opposed the concept of fracking and there are planning policies against the process in Scotland, Wales and Northern Ireland. The most recent public opinion survey puts support for fracking on 18% and opposition at 32%.

Despite this, council funds remain invested in the industry overseas, according to the data published by 350.org, Platform and Friends of the Earth.

According to the data, the largest single pension fund investment in fracking companies is estimated at almost £1bn by Greater Manchester. This is nearly double the amount in the next highest, West Yorkshire, at just over £0.5bn.

Councils with the highest percentage of their pension funds invested in fracking are: Dumfries and Galloway, Greater Manchester and the London Borough of Merton, each with 6-7%.

In Lancashire – the site of the UK’s first ever horizontal shale gas well – the pension fund has invested £187m, or 2.6%, in companies that rely on fracking. In 2015, the county council refused Cuadrilla’s plans to frack at two sites in Lancashire and the authority opposed the schemes at two public inquiries.

In Scotland, where there is a moratorium on fracking, the data says councils collectively invested a total of £927m of pension fund money in 12 companies that frack.

Glasgow City Council has the largest investment in Scotland at £388m, through management of the Strathclyde Pension Fund, the country’s largest council pension fund.

Scottish investment in fracking appears to be increasing. Scottish council have £35m more invested in companies that frack than a similar study found a year ago.

Paul Wheelhouse

Paul Wheelhouse, the Scottish Energy Minister, announcing a moratorium on fracking, 3 October 2017

 

Last year, more than 60,000 people opposed fracking in a Scottish government consultation. The SNP administration announced it would not support planning applications for fracking and is currently carrying out an strategic assessment of the policy.

Despite this, Scotland’s councils are profiting from a practice that is not permitted in Scotland, the groups argue.

The investment data was compiled from Freedom of Information responses. Platform asked every council that manages a UK local authority pension fund for a full list of investments for the year 2016-2017. It analysed the data to calculate the amount invested in the industry based on 24 companies identified to be participating in fracking. These ranged from multinational companies, such as Shell, BP and ConocoPhillips, to IGas, the smaller stock market-listed operator with shale gas interests in the UK.

A report, Divest Fracking, which accompanies the data said the expansion of gas extraction is threatening to undermine efforts set out in the Paris Agreement to limit the global temperature increase to 1.5C.

It said analysis by Oil Change International had shown that reserves in currently operating oil and gas fields alone would resulting in warming beyond 1.5C

“This means that fossil gas must be phased out, not increased.”

The report added:

“Getting UK councils to divest from all fossil fuels represents a powerful way to do [this]”

Research by GoFossilFree.org shows that commitments to divest fully from fossil fuels have been made by seven councils in Derby, Hastings, Monmouthshire, Oxford, Reading Southwark and Waltham Forest.

Another 10 councils have made partial commitments to divest: Brighton, Bristol, Cambridge, Hackney, Haringey, Kirklees, Lewes, Norwich, Sheffield and Stroud.

pnr 180828 Ros Wills2

Outside Cuadrilla’s shale gas site at Preston New Road in Lancashire. Photo: Ros Wills, 28 August 2018

Reaction – Lancashire

Matthew Brown, Leader of Preston Council

“It’s disappointing to see local authority pension funds being invested in the fracking industry. Fracking destroys local landscapes, threatens communities and fuels climate change across the globe. Council pension funds should be going to support clean fossil free energy which will secure a good return for members and help tackle climate change.”

Claire Stephenson, Frack Free Lancashire

“It’s incredibly short-sighted and worrying that Lancashire County Council has such a vested interest in a dirty fossil fuel industry like fracking.

“Climate change is an urgent issue and is happening right now across the globe. Our politicians have an ethical and moral responsibility to divest from climate-damaging fossil fuels and show climate leadership by supporting clean, renewable energy.

“This shocking revelation of where our councillors have their pensions invested is unsupportable and we urgently call for change and divestment.”

Reaction – England

Deirdre Duff, divestment campaigner, Friends of the Earth

“UK councils should know better than to invest in fracking companies. These companies are inflicting their fracking operations on communities around the world, and this can have significant impacts. Many UK councils have rightly opposed fracking in their own area – however it is shocking that they still support the global fracking industry. We should remember too that the climate change caused by fracking will affect us all, no matter where the fracking is conducted.”

Sakina Sheikh, divestment campaigner, Platform

“The devastating fires and record temperatures this summer have brought the impacts of climate change home. Neither local communities nor our climate can afford for the fracking industry to win. Our councils are providing everyday support to the frackers, it’s time to stop. It’s time to divest from fossil fuels.”

Reaction – Scotland

Mary Church, Friends of the Earth Scotland’s head of campaigning

“Opening up new frontiers of fossil fuels like fracked gas whether here or in the US is completely irresponsible in the context of the global climate crisis. The Scottish Government and Parliament oppose fracking because of the serious risks it poses to our environment and health. If fracking is too dirty and dangerous for us here in Scotland we shouldn’t be trying to profit from it taking place in other countries either.

“The pressure will be on SNP, Labour, Lib Dem and Green Councillors on Pension Committees whose parties oppose fracking in Scotland to put in place an investment approach that supports a healthy future for us all, instead of making a quick buck from dirty industries like fracking.”

Stephen Smellie, UNISON Scotland deputy convenor and Strathclyde Pension Fund member

“Using pension funds to invest in fracking is wrong on environmental and safety grounds. Fossil fuels in general and fracking particularly are risky investments given doubts about the financial viability of fracking and the need to reduce the reliance on fossil fuels. There are other better ways to invest our pension funds and Councils should be living up to their climate change obligations, investing in clean energy solutions, not more fossil fuels.”

  • A global day of action, Rise for Climate, is planned for Saturday (8 September 2018) to promote 100% renewable energy.

65 replies »

  1. Keep on digging refracktion! We had the same type of marketing nonsense around the FOE discussion. As a qualified marketer, and wanting to see fracking tested in UK, I like the results of the government’s polling. Equally, I like the antis attempts to distort them because that may excite a few antis but will make many undecided see the difference between the reality and the anti fantasy. Just like the section on Channel Four News last night regarding the UKOG injunction where they interviewed the two ladies with fresh make up and hair done declaring how people should be allowed to object in their own way, and then, unfortunately for the antis, they showed the reality of the “objection” at HH.

    It’s like something out of the 1940s with the Political Officer exciting the small band of troops that they are the “majority” and forcing them into the attack against the “weak” defences. When they are mowed down and the survivors try and make it back to the lines they are shot by the Political Officer for not achieving their objectives-PhilipP remembers that one!

    Undated via social media, but all been done before.

    • Breaking – “Expert” marketeer Martin Collyer dismisses 18 successive government polls as “marketing nonsense” but says he likes it anyway.

      I’m glad you are noticing that the breadth of opposition goes from climate activists right through to conservative residents who are appalled at what they are seeing – this is exactly what the government polling was telling you before they got to embarrassed to keep asking the questions.

      You can try to rewrite history if you like, but then you are doing the job of your Political Officer.

    • KatT

      No fingers burned, just good returns on the investments over time.

      I think that the story is a product of its time ( October 2015 ) when commodity prices were falling leading to some angst among the major mining companies.

      It is also a story in retrospect, where anyone can compare what you have lost by investing in shares that have … er…dropped, to some that have not, in retrospect.

      Note that Commodity prices include metals as well as coal etc, so it was not just coal that drove the problem.

      But let’s see how the investments have weathered that storm which bottomed out in January 2016.
      The report says that mining company shares have fallen sharply over the last 18 months, so from April 2014 to today…..

      Looking at the three companies mentioned…

      Anglo American. Then 1500. Now 1541. Dividend 4.91%

      BHP Billiton. Then 1500. Now 1661. Dividend 5.36%

      Glencore. Then 300. Now 311. Dividend 3.19%

      RioTinto. Then 3000. Now 3660. Dividend 5.91%

      So positive returns all round and no loss whatsoever to the pension funds.

      In addition all the funds pay a dividend, I have put the most recent ones in above.

      But assuming 4% Dividend reinvested and an average price money invested in a basket of those companies would yield a return of 32% from April 2014 to Today ( 4.5 years ).

      If the pension funds had continue to drip cash into those funds the returns would be greater.

      Indeed, £1000 invested in Anglo American in Jan 2016 will now be worth £7000, plus any dividend payments.

      So, with dividends re invested a return of 50% is not impossible.

      Happy pensioners all round.

      The moral of the story is not to follow the investment advice of the Guardian reporter, who did not

      1. Provide balance by saying what % of the company was fossil fuel related.
      2. Forgot to mention that these companies are producers of other minerals
      3. Did not foresee further drops
      4. Did not foreseee the rebound.
      5. Did not see the move out of fossil fuels by large integrated mining companies.

      An example ….

      BHP produce Aluminium, Copper, Diamonds, Iron Ore, Uranium, Borates, salt, Illmenite, Titanium, Lithium and the a small bit of coal.

      In July 2018 BHP recorded a 40% increase in coal production to … 2.7 Million Tonnes per year.
      The same as Thoresby and a bit of Kellingley prior to their closure ( ie almost nothing ).

      This is the last year they will be producing coal, if the sale goes through, leaving BHP as a fossil fuel free miner.

      Other integrated miners are following suit as coal mining has fallen out of fashion ( with China and India the big customers ).

      Hence the reporter also missed the point that it will be the integrated mining companies who manage the risks of stranded assets and trouble with coal, and companies who are fleet of foot and forward looking will remain while other smaller companies such as UK Coal ( one to remember ) go out of business.

      The tristees can relax, no threat of legal action, unless they had bailed out of the integrated miners and invested in something else. Hopefully not something a politician wants you to invest in.

      By the by, if they had bailed out of the integrated miners and put their funds into social housing or transport, how would they have done?

      Stagecoach. Then 380. Now. 163. Loss of 51%. Yield 4%. Result. Trustees in prison?

      There will be other shares to compare with, but the reporter in me will always pick the ones that support the narrative.

  2. I think you risk questioning the intelligence of your audience, refracktion. Not the poll that is marketing nonsense but simply the attempts by the antis to manipulate those results, just as they did the findings of the ASA.

    No wonder you are failing to gain new recruits, based upon the findings within that poll, and those you have managed to gain in the past even now seem to have little knowledge of why they were recruits! That is no surprise to some of us.

    Of course I like the poll results. You may try and spin them into your fantasy, but I like the reality of them.

    The more interesting results will be AFTER some test fracking has been completed-just the same as when a group of individuals are asked about the washing powder after they have seen the results in their own wash. Then you will see results based upon knowledge and experience. No need to be frightened of it-it could go either way!

    • The ASA is interesting isn’t it? Tell me, how many rulings have there been against fracking companies and how many against anti-frackers? I’ll give you a start here Martin – there have been none against any antifrackers.

      You seem totally blind to the fact that any criticism you have of opposition numbers mocks yourself twofold at the same time. The reality of the poll results really isn’t good for you tiger.

      I agree that marketing fracking is probably about as honest as the marketing in those old soap adverts, but again that’s not really a good look for you, especially when people see the stains left in the community by the fracking process.

  3. The reality is good refracktion, which is why it worries you enough to generate the fog.

    Interesting it is always yourself who emerges to try and defend this issue. A short straw that has been passed to you, and praise for accepting it, but you seem to make it shorter each time. Even the most ardent anti can see through your carefully selected semantics. Not a good look to try those tactics-have some respect for your buddies. They may start to think more snake oil salesman than someone who knows about marketing.

    Never mind. Now it is not each quarter more time to try and pass the straw on, but like the green bottles, not much left.

  4. Ahh, but then I’m the one qualified in marketing, refracktion, so “anyone” would think the professional might have more insight than the amateur. That’s the case in the real world, but for those in fantasy land I’m sure your tea parties are a real draw.

    You might also find “everyone” is suspicious of someone else talking for them. Especially those who bother to do their own research into market research because then they will find “everyone” is only someone trying to spin.

    • Oh Martin! You don’t have to have a formal qualification in marketing to understand how market research polling works. Do us a favour.

      Given that you don’t even seem to be able to understand the outputs of the polling I won’t be seeking any of your “qualified” “insights” lol.

      I have no idea what your last paragraph is supposed to mean and I somehow doubt you do either. It’s just more Martindegook isn’t it?

  5. Local Councillors reject most oil and gas developments going against their own planning officers recommendations for approval and Government guidelines.

    The reason Local Councillors reject oil and gas development in their Council areas is to selfishly secure their continuing place on the Council

    This brings into question the conflict of interests. By refusing U.K shale gas at Local Council level it gives advantage to the £9,000,000,000 invested by Local Councils in foreign shale industries

    Since the Friends of the Earth through the freedom of information act presented these findings NOT ONE LOCAL COUNCIL has said they will be addressing the issue…

  6. Comprehension a bit of a problem then? Although, it isn’t, is it-because you studiously avoided claiming to represent anyone but yourself this time. Sorry, old chap, a relic of my past. P45 if language was misused in marketing text to claim more than supported by fact-although it seems not for FOE.

    I, meanwhile, quite understood you would not be an individual who would be my audience. I was really after someone who had an open mind and wished to be helped through the fog. Thanks for prolonging that opportunity and generating the fog.

    Only another 9 months (?) to go until the next opportunity.

    • Martin you appear to be rambling again. Never mind.

      In your relic filled past did they teach you which was the bigger number – 18 or 32? and just as importantly 2 or 13 (if you don’t understand the last reference you only have to ask – I’ll be glad to shine some light through the fog which is evidently clouding your brain)

  7. Pension funds, which tend to invest in long term and stable sectors/companies

    So £9,000,000,000 is a good enough indicator to show what industry is long term and stable…

  8. So Lancashire County Council will be bankrupt within the next year according to this news article

    https://www.bbc.co.uk/news/uk-england-lancashire-37486724

    Lancashire County Council said no to U.K shale gas but invests £187 Million in foreign fracking industry

    https://www.blackpoolgazette.co.uk/news/criticism-at-lancashire-county-council-s-pension-fund-investments-in-companies-linked-to-fracking-1-9331949

    But I am sure Lancashire County Council uses its money wisely?

    Lancashire County councillors set to buy new phones and double early morning bus fares for disabled

    https://www.lep.co.uk/news/politics/county-councillors-ring-the-changes-as-they-are-offered-iphones-after-terrible-experience-of-current-handsets-1-9295483

    http://www.lancashiretelegraph.co.uk/news/16398245.lancashire-county-councillors-set-to-buy-new-phones-and-double-early-morning-bus-fares-for-disabled/

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